February 6, 2011

Investing in Corporate Bonds

By Planet Wealth

pstrongCorporate Bonds Information/strong/p
pa title=Corporate Bonds href=http://www.investorsmarts.com/investor-topics/Corporate-Bonds.html target=_selfCorporate Bonds/a are debt securities that are issued by all sizes of Companies to raise capital to either continue operations, expand operations, or to raise capital for other purposes. Companies would rather issue Corporate Bonds than borrow from a Bank because they pay lower interest than they would pay a bank.br /InvestorsYou) can buy these bonds when issued from most large brokerage firms, or in the aftermarket on most of the securities exchanges. When you buy a Corporate Bond you are interested mostly in the yield you will get, not the coupon yield. The reason for this is that Corporate Bonds pay dividends that are fixed, just like most other Bonds.nbsp; So, if the price of the bonds are less than when issued, called Par Value, your yield will be higher.nbsp; Conversely, if the Bond price is higher than Par Value, the yield will be lower than when issued.nbsp; So the two components of Corporate Bonds that will result in your yield are the price and dividend.nbsp; Corporate Bonds generally yield more than CDrsquo;s but also entail more risk and are not guaranteed against loss by S.I.P.C.br /nbsp;Bonds are rated for their solvency and ability to pay their dividends to bondholders. The rating agency is called Moodyrsquo;s. The best rating is ldquo;AAArdquo;, and the lowest is ldquo;Crdquo;.nbsp; The lower the rating, the higher the yield will be, since investors want to be compensated for the added risk.nbsp; Any Corporate Bond that is not rated is called a ldquo;Junk Bondrdquo;.nbsp;nbsp; They pay the highest yield, but can be risky. br /So compare current Corporate Bond yields and consult a specialist in Corporate Bonds before making a buy.br /The simplest way to buy a Corporate Bond is to buy a Corporate Bond Mutual Fund.nbsp;nbsp; In addition to having a professional management team to select the bonds, you can get a check sent to you every month in the event you need monthly income.nbsp; Since there are sometimes 100rsquo;s of bonds in the mutual fund, the risk is spread out more than purchaseing a single issue.nbsp; With a title=Corporate Bond Funds href=http://www.investorsmarts.com/investor-topics/Corporate-Bonds.html target=_selfCorporate Bond funds/a, they are simple to sell.nbsp; You can buy funds that have no sales charges directly through a no-load fund family, or through a financial advisor who will offer you guidance but will entail sales charges./p
pIf you delight in learning about a title=Investing Information href=http://www.investorsmarts.com/page4.html target=_selfInvesting infomation/a, please visit Investor Smarts or information on a vaiety of Investor Topics./p

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